The neighborhood you grow up in matters. A great deal. Especially in a highly unequal society like the United States.
Just consider the chart above [ht: ja]. It shows that poor kids (at or below the 25th percentile) who grow up in Baltimore City county—where Freddie Gray was killed—will make, on average, nearly $3,500 less than the national average.
The same is true across the country, including Cook County, Illinois. There (as shown in the chart on the left), a child in a poor family would make $3480—or 13 percent—less at age 26 compared to poor families nationwide (and they’d be much better off if they were raised in DuPage county). By the same token (according to the chart on the right), if a child in the top 1 percent were to grow up in that same county, they would make $1290 more at age 26 compared with children in families in the top 1 percent elsewhere in the country (but they’d do even better in Kankakee county).
That’s what we’ve learned from the new study by Raj Chetty and Nathaniel Hendren. Neighborhood matters. A great deal. Especially in a highly unequal society like the United States.
But, in all honesty, we’ve known that neighborhood matters for a long time. Since at least 1901-02, when Charles J. Bushnell published his pioneering study of the Stock Yards neighborhood in the American Journal of Sociology (as if to confirm Justin Wolfers’s observation that “sociologists have typically been quicker than economists to embrace the idea that neighborhoods are important”). Which, remember, was the same neighborhood (referred to as Back of the Yards) Upton Sinclair wrote about in The Jungle.
Bushnell’s analysis was particularly compelling because he compared two neighborhoods that butted up against one another on the south side of Chicago: Back of the Yards and Hyde Park (where the University of Chicago is located). What he showed, for example, is that in 1897, 70 per cent of the families in economic distress were found in 27 per cent of the territory, while in 1900 92.5 per cent of the distress was found in 27 per cent of the territory—and that the territory referred to was located wholly within the Stock Yard district. The difference between the two neighborhoods could not have been more stark.
But, Bushnell also observed,
it is significant to note the fact, indicative of the vaguely apprehended and poorly organized conditions of life in our large cities, that the very community which is thus helping to support the agency which is trying to rescue the people of the Stock Yard district from the effects of their bad sanitary and economic conditions, is at the same time, perhaps without recognizing the fault, sending its garbage over into the Stock Yard district to make its sanitary and economic conditions worse.
It is not just that conditions and outcomes were different in the two neighborhoods; the poor conditions in the Stock Yard district were caused, at least in part, by the fact that the residents of Hyde Park were using the Stock Yard district as their dumping ground.
And that’s the lesson we learned then but seem to have forgotten now: not only that neighborhood matters, but also that—”perhaps without recognizing the fault”—we continue to create and treat our poorest neighborhoods as both a source of enormous wealth and a dumping ground for the detritus of the tiny minority who manage to live elsewhere.
In other words, the solution to the slim prospects of children in poor neighborhoods is not to somehow encourage their families to move into better neighborhoods. What we have to do, as a society, is eliminate the very fact that neighborhood matters—in Baltimore, Chicago, and elsewhere—by transforming the economy that creates such unequal neighborhoods in the first place.